Employee growth opportunities are crucial to the longevity of any business.

Salons are no different! When opening our first salon, we had to learn the hard way. Our compensation was inconsistent, and there was no standardized structure.

As a result, there was resentment among stylists and no path for promotions and growth. We didn’t know what to do, and our lack of a standardized pay structure made it impossible to give raises when we needed to give raises.

Outlined expectations and clear compensation structures are so important if you want to create a positive work culture among hair stylists and every other individual at your salon. Having a standardized structure in place will save you time, money, and a lot of headaches down the road.

Don’t make the mistake of a messy, inconsistent compensation plan; you can’t afford to have a slippery foundation for pricing and promotions. It will only lead to:

Animosity for people who are making more than others

Frustration for management when expectations aren’t met

Complacency and a lack of motivation due to unclear incentives or promotion goals

A standardized structure for payment and growth, or lack thereof, will make or break your salon. To avoid any compensation mistakes so your employees are happy and you don’t overpay or underpay, consider the following:

1. Compensation levels inspire hard work and a clear vision.

Having multiple compensation levels for stylists is like handing them the keys to their own success—and your salon’s. [Click to Tweet]

Outlining a specific path from one level to the next is the road map they need to achieve professional satisfaction. It will motivate them to adopt the salon’s core values, take ownership of the salon’s vision, and reinforce their own value.

Nothing kills motivation to constantly improve more than a dead-end compensation structure.

In fact, according to Gallup’s, State of the American Workforce Report,over 70% of American employees are not engaged or fully committed at work. They aren’t working to their full potential, affecting economic growth.

Your employees want to move forward. Once these levels are clearly defined, it may surprise you which person on your team is most ready to make the leap toward that next goal.

2.Create a clear-cut road map to get from one level to the next.

Why fuel a cut-throat, frustrating environment where one stylist is making more than another—without a clear reason why—when you could cultivate positive self-speculation and personal ambition?

A dose of healthy competition is fine. But if an unclear pay structure is causing strife or hostility toward management or other stylists, frustration will eventually lead to complacency or discontentment at your salon. Don’t lose your best stylists because they don’t have the room—or resources—to grow at your salon.

In the same vein, don’t leave your employees guessing.

Communication is the key to personal and professional relationships. Who would want to be in a relationship without really knowing where it’s going? [Click to Tweet]

Setting your employees up to pursue their own ideas of how to get promotions will only lead to misguided expectations.

AtTangerine Salon, we offer clear steps for how to get to the next price point and the next commission percentage. Always set a standardized road map of what they can do.

3.Walk them through Point A to Point B.

A roadmap isn’t enough; you have to give your employees a clear understanding of where they are starting and ending up, where they are at all times, and where they are ultimately going—from the moment you hire them.

Create a standard for each department of what Point A looks like and what Point B looks like. At Tangerine Salon, we have a definitive starting point (Point 1) and a definitive ending point (Point 8). Establish how many raises or levels there are and set your employees up to pursue each growth opportunity.

4. Establish a specialized compensation structure within each department.

Each department within your salon has different requirements. Pay is different for spa employees than for hair stylists.

Product usage may be more expensive in one division than another. Square footage in one department may factor in to your specialized compensation model. Assess a standard pay structure for each department.

For guest services at Tangerine Salon, each employee acknowledges the specific starting price point and the necessary steps it takes to be promoted as a guest services lead or key holder. They are well aware of the hourly wages as they move toward different levels specific to guest services.

5.Set performance standards—business and people metrics.

To create a solid, standardized compensation structure, you have to establish performance metrics for different roles. There are a few ways we recommend doing this:

Vision cards:

Each stylist at Tangerine Salon is given a vision card for the next level. Studio stylists want to become senior stylists. A vision card is a tangible reminder of where they are on their road maps and where they are going.

When creating a vision card, generate five or six different goals so they know exactly when they can move to the next level. This is an excellent way to establish specific business metrics: how much retail do they need to sell? What is their average service ticket?

The “mensch” standard.

Separate your performance standards into two categories: business and people metrics. At Tangerine salon, we like to celebrate “mensch” qualities.

Mesch: "A person of integrity and honor”

We provide a new hire class called “Are You a Mensch?” because we believe in a set of qualities that are invaluable. You may hit all the business metrics, but the “mensch” standard helps managers gauge who’s volunteering at charity events, participating in educational opportunities, or working well with the team.

Get as creative as you need to be to come up with a standard that works for you and your salon—and make sure it’s something the whole team can understand and aim for.

6.Frequently meet with your employees to see where they are.

This seems like a simple concept, but it’s one of the most important things we do at Tangerine Salon. Make sure you’re checking in with your employees to evaluate their vision cards and various metrics so there is no room for confusion or miscommunication. We like to conduct weekly and annual check-ins: managers go over the numbers with employees, but we also measure by annual reviews.

The more frequent the meetings, the more your employees know exactly where they are by the time their annual meetings are scheduled.

How you handle your compensation structure will determine the success of your salon. [Click to Tweet]

Conclusion

Take the time you need to establish the best methods that work for you.